The Chrysler Group LLC has reversed itself.
After refusing to claim legal responsibility for injuries resulting in defective cars still on the road, the automaker has agreed to cover product liability claims that result after the company emerged from bankruptcy protection on June 10.
In a company letter sent to Congress last Friday, Chrysler says that future car accident victims, who believe their injuries resulted from a defective, seat belt, roof, side air bag, or any other auto part, will be able to sue the new company.
However, 300 or so claims that were pending before Chrysler emerged from bankruptcy, will not be covered. Their stories are told in a Center for Justice & Democracy – Victim Cases Wiped Out report.
They must fight over what remains of the old company’s bankruptcy estate, even though some have life-long injuries that will require millions in treatment.
"While Chrysler Group still faces challenges, we are confident that the future viability of the company will not be threatened if we accept these claims," John Bozzella, Chrysler's senior vice president for external affairs said in a statement. "We want our customers to feel comfortable and confident buying, driving and enjoying one of our vehicles."
Why the Change?
Without offering liability protection, the New Chrysler faced uncertainty among the 30 million vehicle owners still on the road. And selling used Chryslers would have been virtually impossible, especially if injured consumers got what they requested of the Federal Trade Commission – a skull and crossbones sticker on any used Chrysler to warn consumers about defects and no recourse.
In the Petition to FTC, the Federal Trade Commission – injured consumers list a host of defective problems with Chrysler vehicles including:
- Collapsing seat backs – The defect exists in over 10 million vehicles model years 1990 to 2009.
- SUVs with collapsing roofs – Since 1994, Chrysler has produced over two million Grand Cherokee SUV with roofs that tend to buckle or cave in, resulting in traumatic head injuries and paralysis.
- Tailgate Latch failures – Minivan tailgates flew open resulting in 40 deaths, many of them children, yet only half of the 4.1 minivans were repaired
- Jeep Grand Cherokee – Fuel Tanks mounted to the rear of the axle tend to explode during collisions. Fire deaths are a danger posed by approximately three million vehicles 1993 to 2004.
In testimony in the bankruptcy hearing for Chrysler last May, CEO Bob Nardelli admitted those individuals injured with claims would have to turn to the bankrupt Old Chrysler.
Will that hurt sales of used Chryslers? he was asked.
“Consumers might be willing to take the risk if it had an attractive price on it,” said Nardelli.
Chrysler filed for bankruptcy protection on April 30, 2009. As part of the deal, Chrysler Group LLC agreed to assume liability only for those cars sold by the new company after the June 10 date of its formation. Fiat SaP, which acquired a 20 percent stake in Chrysler, didn’t want the new company burdened with those claims, reports the Detroit News.
General Motors, which also went through bankruptcy, agreed to take on pending claims after more than a dozen state attorney generals banded together in protest, reports the Wall Street Journal, however the companies together have an estimated 2,000 liability claims that were pending before the bankruptcy. #